What changed in this filing

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Item 9A. Controls and Procedures

2024-03-28 compared with 2023-03-20 · 557 added, 675 removed, 535 unchanged (70% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer, who is our principal

executive officer, and our Chief Financial Officer, who is our principal financial officer, evaluated the effectiveness of our disclosure

controls and procedures as of December 31, 2022.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e)

and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required

to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within

the time periods specified in the SEC’s rules and forms.

Our President and Chief Executive Officer,

who is our principal executive officer, and our Interim Chief Financial Officer, who is our principal financial officer, evaluated

the effectiveness of our disclosure controls and procedures as of December 31, 2023.

The term “disclosure controls and

procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a

company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the

Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

Disclosure controls and procedures include, without

limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or

submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial

Officer, to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and our Chief

Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

submit under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and our Interim

Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based on this evaluation, our President and Chief Executive Officer

and our Interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2023.

Management’s Annual Report on Internal Control Over Financial

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and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange

Our Chief Executive Officer and our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting

as of December 31, 2022.

In making this assessment, our Chief Executive Officer and our Chief Financial Officer used the criteria

set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control—Integrated Framework.

Based on that assessment and using the COSO criteria, our Chief Executive Officer and our Chief Financial Officer have concluded that,

as of December 31, 2022, our internal control over financial reporting was effective.

Our President and Chief Executive Officer and our Interim Chief Financial Officer assessed the effectiveness of our internal control over financial

reporting as of December 31, 2023.

In making this assessment, our President and Chief Executive Officer and our Interim Chief Financial Officer

used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control—Integrated

Based on that assessment and using the COSO criteria, our President and Chief Executive Officer and our Interim Chief Financial Officer have

concluded that, as of December 31, 2023, our internal control over financial reporting was effective.

Our independent registered public accounting firm

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There have been no changes in our internal control

over financial reporting during the year ended December 31, 2022, that has materially affected, or is reasonably likely to materially

affect, our internal control over financial reporting.

over financial reporting during the most recent fiscal quarter, that has materially affected, or is reasonably likely to materially affect,

our internal control over financial reporting.

Inherent Limitations of Controls

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Number of securities to be

average exercise price

average exercise

Number of securities

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Equity compensation plans not approved by security holders (2)

(1) Represents shares of common stock

issuable upon exercise of outstanding stock options and rights under our 2018 Stock Incentive Plan (the “2018 Plan”) and

2021 Stock Plan (the “2021 Plan”).

Both plans permit the Company to grant incentive and nonqualified stock options for the

purchase of common stock, and restricted stock awards.

The maximum number of shares of common stock reserved for issuance under the 2018

Plan and 2021 Plan are 629,440 and 1,960,000, respectively.

At December 31, 2022 there were 262,269 and 1,339,721 shares of common stock

available for grant under the 2018 Plan and 2021 Plan, respectively.

(2) Consists of warrants issued to

placement agents, underwriters and consultants.

(1) Represents

shares of common stock issuable upon exercise of outstanding stock options and rights under our 2018 Stock Incentive Plan (the “2018

Plan”) and 2021 Stock Plan (the “2021 Plan”).

Both plans permit the Company to grant incentive and nonqualified stock

options for the purchase of common stock, and restricted stock awards.

The maximum number of shares of common stock reserved for issuance

under the 2018 Plan and 2021 Plan are 31,472 and 98,000, respectively.

At December 31, 2023 there were 13,113 and 40,377 shares of common

stock available for grant under the 2018 Plan and 2021 Plan, respectively.

of warrants issued to placement agents, underwriters and consultants.

CERTAIN RELATIONSHIPS AND RELATED

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part

of this report:

(1) Financial Statements—See

Index to Consolidated Financial Statements at Part II, Item 8 on page F-1 of this Form 10-K.

(2) All financial statement schedules

have been omitted because they are not applicable or not required or because the information is included elsewhere in the financial statements

or the Notes thereto.

(3) See the accompanying Index to

Exhibits filed as a part of this Form 10-K, which list is incorporated by reference in this Item.

(b) See the accompanying Index to Exhibits filed

as a part of this Form 10-K.

(a) The following documents are filed as part of this report:

(1) Financial

Statements—See Index to Consolidated Financial Statements at Part II, Item 8 on page F-1

of this Form 10-K.

financial statement schedules have been omitted because they are not applicable or not required or because the information is included

elsewhere in the financial statements or the Notes thereto.

the accompanying Index to Exhibits filed as a part of this Form 10-K, which list is incorporated by reference in this Item.

(b) See the accompanying Index to Exhibits filed as a part of this

INDEX TO EXHIBITS

Description of Document

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Bluejay Diagnostics, Inc., filed with the Delaware Secretary of State on July 21, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 21, 2023).

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No.

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333-260029), filed on October 4, 2021).

Form of Class A Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No.

001-41031), filed on November 16, 2021).

Form of Prefunded Common Stock Warrant (January 2024 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 2, 2024).

Form of Common Stock Warrant (January 2024 Offering (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 2, 2024).

Form of Placement Agent Common Stock Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on January 2, 2024).

Form of Common Stock (August 2023 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on August 28, 2023).

Form of Class A Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 16, 2021).

Form of Class B Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 (File No.

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Description of Securities of Bluejay Diagnostics, Inc.

(incorporated by reference to Exhibit 4.6 to the Company’s annual report on Form 10-K for the year ended December 31, 2021.

2021 Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

License and Supply Agreement, dated October 6, 2020, by and between Toray Industries, Inc.

and Bluejay Diagnostics, Inc.

(incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

Employment Agreement, dated July 1, 2021, between Neil Dey and Bluejay Diagnostics, Inc.

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333-260029), filed on October 4, 2021).

Employment Agreement, dated July 1, 2021, between Gordon Kinder and Bluejay Diagnostics, Inc.

(incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

Employment Agreement, dated July 1, 2021, between Jason Cook and Bluejay Diagnostics, Inc.* (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

Employment Agreement, dated July 1, 2021, between Kevin Vance and Bluejay Diagnostics, Inc.

First Amendment to Employment Agreement, dated January 27, 2023, between Neil Dey and Bluejay Diagnostics, Inc.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 27, 2023).

Employment Agreement, dated July 1, 2021, between Jason Cook and Bluejay Diagnostics, Inc.

* (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

of Securities Purchase Agreement, dated December 27, 2023, between certain purchasers and Bluejay Diagnostics, Inc.

(incorporated by

reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 2, 2024).

Form of Securities Purchase Agreement, dated August 24, 2023, by and between the Company and each of the Purchasers signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on August 28, 2023).

Securities Purchase Agreement, dated June 7, 2021, between certain purchasers and Bluejay Diagnostics, Inc.

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333-260029), filed on October 4, 2021).

Amendment to License and Supply Agreement, dated July 21, 2021, by and between Toray Industries, Inc.

and Bluejay Diagnostics, Inc.

(incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No.

333-260029), filed on October 4, 2021).

First Amendment to Employment Agreement, dated January 27, 2023, between Neil Dey and Bluejay Diagnostics, Inc.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.

001-41031), filed on January 27, 2023).

Amended and Restated License Agreement, entered into on October 23, 2023, by and between Bluejay Diagnostics, Inc.

and Toray Industries, Inc.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 26, 2023).

Master Supply Agreement, entered into on October 23, 2023, by and between Bluejay Diagnostics, Inc.

and Toray Industries, Inc.

(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 26, 2023).

Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Registration Statement on Form S-1 (File No.

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)

Incentive Compensation Recovery Policy

Inline XBRL Instance Document

(the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

Inline XBRL Taxonomy Extension

Schema Document

Inline XBRL Taxonomy Extension

Calculation Linkbase Document

Inline XBRL Taxonomy Extension

Definition Linkbase Document

Inline XBRL Taxonomy Extension

Label Linkbase Document

Inline XBRL Taxonomy Extension

Presentation Linkbase Document

Cover Page Interactive

Data File (formatted as Inline XBRL and included in Exhibit 101)

** Management

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Bluejay Diagnostics, Inc.

Chief Executive Officer and Director

President, Chief Executive

Officer and Director

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Director and Chief Executive Officer

President, Chief Executive Officer and Director

March 28, 2024

(Principal Executive Officer)

Kenneth Fisher

Financial Officer

Kenneth Fisher

/s/ Frances Scally

Interim Chief Financial Officer

March 28, 2024

Frances Scally

(Principal Financial and Accounting Officer)

/s/ Douglas C.

Chairman of the Board of Directors

March 28, 2024

/s/ Donald R.

March 28, 2024

/s/ Svetlana Dey

March 28, 2024

Gary Gemignani

March 28, 2024

/s/ Gary Gemignani

March 28, 2024

Gary Gemignani

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Consolidated Statements of Operations F-4

Consolidated Statements in Redeemable Preferred Stock and Stockholders’ Equity (Deficit) F-5

Consolidated Statements of Changes in Stockholders’ Equity F-5

Consolidated Statements of Cash Flows F-6

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balance sheets of Bluejay Diagnostics, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations,

stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements

(collectively, the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years

then ended, in conformity with accounting principles generally accepted in the United States of America.

Uncertainty Relating to Going Concern

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements

of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial

statements (collectively, the “financial statements”).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows

for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matter Regarding Going Concern

The accompanying financial statements have been

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This raises substantial doubt about the Company’s ability to continue as a going concern.

Management's plans in regard

to these matters also are described in Note 1.

The financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

plans in regard to these matters also are described in Note 1.

The financial statements do not include any adjustments that might result

from the outcome of this uncertainty.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

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/s/ Wolf & Company, P.C.

Wolf & Company, P.C.

We have served as the Company’s auditor since 2017.

Boston, Massachusetts

Mar ch 20, 20 23

March 28, 2024

Bluejay Diagnostics, Inc.

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Prepaid expenses and other current assets

Deferred offering costs

Total current assets

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Operating lease liability, current

Accrued expenses and other current liabilities

Accrued expenses

Total current liabilities

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Total liabilities

Commitments and Contingencies (See Note 13)

Commitments and contingencies (Note 9)

Stockholders’ equity:

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7,500,000 shares authorized;

20,215,288 and 20,112,244 shares issued and outstanding at December 31, 2022 and 2021, respectively

1,239,140 and 1,010,560 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

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See notes to consolidated financial statements.

Reflects a 1-for-20 reverse stock split effective

July 24, 2023.

Bluejay Diagnostics, Inc.

Consolidated Statements of Operations

For the Years Ended

For Years Ended

Cost of sales

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General and administrative

Marketing and business development

Sales and marketing

Total operating expenses

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Other income (expense):

Interest expense, net of amortization of premium

Impairment of property and equipment

State grant income

Interest income

Other income, net

Total other income (expense), net

Total other income

$ ( 9,953,888 )

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See notes to consolidated financial statements.

Reflects a 1-for-20 reverse stock split effective

July 24, 2023.

Bluejay Diagnostics, Inc.

Statements of Changes in Redeemable Preferred

Stock and Stockholders’ Equity (Deficit)

Convertible Preferred Stock

Consolidated Statements of Changes in Stockholders’

Stockholders'

Equity (Deficit)

Stockholder’s

Balance at December 31,

$ ( 4,206,488 )

$ ( 4,206,173 )

Exercise of common stock warrants

Accretion of redeemable,

convertible preferred stock to redemption value

Conversion of convertible

debentures into Series D preferred stock

Conversion of redeemable,

convertible preferred stock into common stock

( 1,151,215 )

( 1,834,341 )

( 1,020,426 )

Balance as of December 31, 2021

$ ( 7,694,786 )

Fair value of warrants issued

to placement agent in relation to the Convertible debentures

Conversion of Amended 2017

Convertible Notes into common stock

Reclassification of Series

Stock-based compensation

Issuance of common stock

from exercise of stock options

Issuance of common stock in initial public offering, net of offering costs of $ 2,750,601

Issuance of common stock

from exercise of warrants

Impact of adoption of ASC 842

Stock-based compensation expense

Exercise of stock options

Exercise of common stock Series B Warrants

( 9,296,948 )

at December 31, 2021

Balance as of December 31, 2022

( 16,997,102 )

Impact of adoption of ASC 842

Stock-based compensation

Exercise of stock options

Exercise of common stock

Series B Warrants

Stock-based compensation expense

Issuance of common stock from exercised RSU's

RSU tax withholding

Issuance of common stock to settle accrued bonus, net of shares withheld

Issuance of common stock, net of issuance costs of $ 413,544

( 9,953,888 )

at December 31, 2022

Balance as of December 31, 2023

$ ( 26,950,990 )

See notes to consolidated financial statements.

Reflects a 1-for-20 reverse stock split effective

July 24, 2023.

Bluejay Diagnostics, Inc.

Consolidated Statements of Cash Flows

For the Year Ended

For the Years Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

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Stock-based compensation expense

Amortization of right-of-use assets

Amortization of right-of-use asset

Non-cash interest expense for finance lease

Impairment of property and equipment

Loss on disposal of property and equipment

Issuance of warrants for service

Gain on forgiveness of note payable, Paycheck Protection Program

Non-cash interest expense

Gain on revaluation of derivative warrant liability

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

( 1,551,637 )

Non-current assets

Other non-current assets

Accounts payable

Due to related party

Accrued expenses

Accrued expenses and other current liabilities

Net cash used in operating activities

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CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of principal on notes payable

Payments of convertible debenture issuance costs

Proceeds from initial public offering, net of offering costs

Proceeds from issuance of convertible debentures

Payments on note payable, Paycheck Protection Program

Proceeds from exercise of common stock warrants

Payments of deferred offering costs

Payment of finance lease

Proceeds from issuance of common stock, gross

Payment for issuance costs of common stock

Payment of tax withholding on obligations on restricted stock units

Payment of deferred offering costs

Proceeds from exercise of stock options

Payment of finance lease

Net cash provided by financing activities

(Decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

( 7,906,474 )

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH FINANCING ACTIVITIES

Interest paid

Accretion of Series A redeemable, convertible preferred stock dividend

Accretion of Series A redeemable, convertible preferred stock issuance costs and fair value adjustment

Accretion of Series B redeemable, convertible preferred stock dividend

Accretion of Series B redeemable, convertible preferred stock issuance costs

Accretion of Series C redeemable, convertible preferred stock dividend

Accretion of Series C redeemable, convertible preferred stock issuance costs

Exercise of warrants through debt principal conversion

Conversion of convertible debentures into preferred stock

Conversion of preferred stock into common stock

Conversion of amended 2017 convertible notes

Reclassification of derivative warrant liability into additional paid-in capital

Fair value of warrants issued to placement agent in relation to the Convertible debentures

Fair value of warrants for common stock issued for services

Fair value of warrants issued to underwriters

Liabilities incurred for the purchase of property and equipment

( 8,932,788 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH INVESTING ACTIVITIES

Cash paid for interest on finance lease

Offering costs included in accounts payable and accrued expenses

Purchases of property and equipment included in accrued expenses

See notes to consolidated financial statements.

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Bluejay Diagnostics, Inc.

and/or the “Company”) is a medical diagnostics company developing rapid tests using whole blood on our Symphony technology

and/or the “Company”) is a medical diagnostics company developing rapid tests using whole blood on its Symphony technology

platform (“Symphony”) to improve patient outcomes in critical care settings.

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can provide a solution to a significant market need in the United States.

Clinical trials indicate the Symphony device produces laboratory-quality

results in less than 20 minutes in critical care settings, including Intensive Care Units (“ICUs”) and Emergency Rooms (“ERs”),

where rapid and reliable results are required.

Bluejay’s first product, the Symphony IL-6

test, is for the monitoring of disease progression in critical care settings.

IL-6 is a clinically established inflammatory biomarker,

considered a ‘first-responder,’ for assessment of severity of infection and inflammation across many disease indications,

including sepsis.

A current challenge of healthcare professionals is the excessive time and cost associated determining a patient’s

level of severity at triage and the Symphony IL-6 test has the ability to consistently monitor this critical care biomarker with rapid

In the future Bluejay plans to develop additional

tests for Symphony including two cardiac biomarkers (hsTNT and NT pro-BNP) as well as other tests using the Symphony platform.

does not yet have regulatory clearance for its Symphony products, and its Symphony products will need to receive regulatory authorization

from the FDA in order to be marketed as a diagnostic product in the United States.

Bluejay’s operations to date have been funded

primarily through the proceeds of the Company’s initial public offering (the “IPO”) in November 2021 (the “IPO

On June 4, 2021, the Company formed Bluejay Spinco, LLC, a wholly-owned

subsidiary of the Company, for purposes of further development of the Company’s ALLEREYE diagnostic test.

ALLEREYE is a point-of-care

device offering healthcare providers a solution for diagnosing Allergic Conjunctivitis.

Initial Public Offering

The Company completed its initial public

offering (the “IPO”) in November 2021 (“IPO Date”), whereby it sold 2,160,000 Units at a price of $10.00, with

each Unit consisting of one share of the Company’s common stock, one warrant to purchase one share of common stock at an exercise

price of $7.00 per share (“Class A Warrant”), and one warrant to purchase one share of common stock at an exercise price of

$10.00 (“Class B Warrant”) (collectively, a “Unit”).

Each warrant contained within the Units is exercisable until

the fifth anniversary of the IPO Date, however, holders of Class B Warrants may exercise such warrants on a “cashless” basis

after the earlier of (i) 10 trading days from closing date of the offering or (ii) the time when $10.0 million of volume is traded in

the Company’s common stock, if the volume weighted average price of the Company’s common stock on any trading day on or after

the closing date of the offering fails to exceed the exercise price of the Class B Warrant (subject to adjustment as described in the

warrant agreement).

Additionally, the underwriter of the IPO exercised their overallotment option, solely with respect to the Class A

Warrants and Class B Warrants, shortly after the IPO Date which resulted in an additional issuance of 324,000 Class A Warrants and 324,000

Class B Warrants.

The gross proceeds from the IPO were approximately $21.6 million and were offset by $2.8 million in offering costs.

On June 4, 2021, the Company formed Bluejay Spinco,

LLC, a wholly-owned subsidiary of the Company, for purposes of further development of the Company’s ALLEREYE diagnostic test.

is a point-of-care device offering healthcare providers a solution for diagnosing Allergic Conjunctivitis.

August 2023 Offering

On August 24, 2023, the Company entered into a

securities purchase agreement with certain institutional and accredited investors (the “Purchase Agreement”) relating to the

registered direct offering and sale of 216,000 shares of the Company’s common stock at a purchase price of $ 7.365 per share (the

“August 2023 Offering”).

In a concurrent private placement, the Company

also issued to such institutional and accredited investors unregistered warrants to purchase up to 216,000 shares of Common Stock (the

Pursuant to the terms of the Purchase Agreement, for each share of Common Stock issued in this offering an accompanying

Warrant was issued to the purchaser thereof.

Each Warrant is exercisable for one share of Common Stock (the “August 2023 Warrant

Shares”) at an exercise price of $ 7.24 per share, is immediately exercisable upon issuance and will expire five years from the date

The Warrants were offered and sold at a purchase price of $ 0.125 per underlying warrant share, which purchase price is included

in the offering price per share of Common Stock issued in the Offering (the “Private Placement”).

Pursuant to an engagement letter, dated as of

August 7, 2023 (the “Engagement Letter”), between the Company and H.C.

Wainwright & Co., LLC (the “Placement Agent”)

the Company paid the placement agent a total cash fee of $ 111,359 equal to 7.0 % of the gross proceeds received in the Offering and the

Private Placement.

The Company also paid the placement agent the management fee equal to $ 15,908 or 1.0 % of the gross proceeds raised

in the Offering and Private Placement, $ 45,000 for non-accountable expenses, and $ 15,950 for clearing fees.

In addition, the Company issued

to the placement agent, warrants to purchase up to 15,120 shares of Common Stock (the “Placement Agent Warrants”), which represents

7.0 % of the aggregate number of shares of Common Stock sold in the Offering.

The Placement Agent Warrants have substantially the same

terms as the Warrants, except that the Placement Agent Warrants have an exercise price equal to $ 9.2063 , or 125 % of the offering price

per share of Common Stock sold in the Offering, and a term of five years from the commencement of the sales pursuant to the Offering.

The gross proceeds to the Company from the August

2023 Offering and the August 2023 Private Placement are $ 1,590,840 .

The Company incurred offering costs of $ 413,544 .

FDA Regulatory Strategy

The Company’s current regulatory strategy

is designed to support commercialization of Symphony in the United States pending marketing authorization from the FDA.

Previously, the

Company’s regulatory strategy involved clinical studies involving COVID-19 patients.

However, the Company has shifted its focus

away from COVID-19 patients due to a significant decline in the number of COVID-19 related hospitalizations.

Pursuant to this revised

strategy, the Company is beginning to conduct a clinical study to support an FDA regulatory submission with an initial indication for

risk stratification of hospitalized sepsis patients.

The Company submitted a pre-submission application to the FDA presenting the new

study design in May 2023 and participated in a pre-submission meeting on August 11, 2023.

At the meeting, the FDA provided feedback on

the new study design, determined that the submission of a 510(k) is the appropriate premarket submission pathway, and requested that certain

data be provided in the 510(k).

Based on this feedback, the Company determined to proceed as planned while taking into account the FDA’s

In the first quarter

of 2024, the Company initiated the study at multiple sites, which study is intended to use the Symphony IL-6 test to monitor IL-6 concentrations

in patients who are diagnosed with sepsis or septic shock and are admitted or intended to be admitted to the ICU.

The objective of this

study is to establish IL-6 concentrations in these sepsis patients that best predict 28-day all-cause mortality.

The Company expects that

it will need to bring several additional sites into the study in the future, which it believes will help support initial commercialization

and market penetration.

The Company believes that this clinical trial expansion could also support additional indications, but that

any such expansion also could delay obtaining marketing authorization for the product.

As a result of its lack of cash resources, the

Company has recently slowed the timeline of this study to preserve cash resources in the near-term, and the Company expects that this

will delay its Symphony platform regulatory submission timeline until 2025.

Product Manufacturing

The Company maintains contracts with Sanyoseiko

Ltd (“Sanyoseiko”) to manufacture our device and cartridges, and with Toray Industries, Inc (“Toray”) to manufacture

in the near-term (through its wholly owned subsidiary Kamakura Techno-Science, Inc.) certain product intermediate components for use in

cartridges being manufactured for the Company by Sanyoseiko.

Risks and Uncertainties

The Company is subject to a number of risks similar

to other companies in its industry, including rapid technological change, competition from larger biotechnology companies and dependence

on key personnel.

The Company is also impacted by inflationary pressures and global supply chain disruptions currently impacting many

On October 25, 2022,

the Company received a notification letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”)

notifying the Company that the closing bid price for its common stock had been below $ 1.00 for the previous 30 consecutive business days

and that the Company therefore is not in compliance with the minimum bid price requirement for continued inclusion on the Nasdaq Capital

Market under Nasdaq Listing Rule 5550(a)(2).

The notification has no immediate effect on the listing of the Company’s common stock

on the Nasdaq Capital Market.

The Company intends to take all reasonable measures available to achieve compliance and allow for continued

listing on the Nasdaq Capital Market.

However, there can be no assurance that the Company will be able to regain compliance with the minimum

bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria.

As noted above, Bluejay is reliant upon Toray

and Sanyoseiko to provide cartridges in sufficient quantity and quality to complete our clinical trials, and our clinical trials could

be delayed if the Company encountered any material supply interruptions while the clinical trials are being conducted.

In addition, there

can be no assurance that we will be able to obtain necessary regulatory authorization for the manufacturing or marketing of the Symphony

in the United States or elsewhere.

There also can be no assurance that we will successfully complete any clinical evaluations necessary

to receive regulatory approvals, or that the clinical trial will demonstrate sufficient safety and efficacy of the Symphony.

to adequately demonstrate the clinical performance of the Symphony device could delay or prevent regulatory approval of the device, which

could prevent or result in delays to market launch and could materially harm our business.

In addition to the FDA regulatory strategy risks

and uncertainties, the Company is subject to a number of risks similar to other companies in its industry, including rapid technological

change, competition from larger biotechnology companies and dependence on key personnel.

The Company is also impacted by inflationary

pressures and global supply chain disruptions currently impacting many companies.

On October 25, 2022, the Company received a notification

letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the

closing bid price for its common stock had been below $ 1.00 for the previous 30 consecutive business days and that the Company therefore

is not in compliance with the minimum bid price requirement for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing

Rule 5550(a)(2).

On April 25, 2023, at the Company’s request, Nasdaq’s Listing Qualifications Staff notified the Company that

it had extended the time for the Company to regain compliance with the Minimum Bid Requirement until October 23, 2023.

To regain compliance,

the closing bid price of the Company’s common stock needed to be at least $ 1.00 or higher for a minimum of ten consecutive business

On July 24, 2023, the Company effected a reverse

stock split of its shares of common stock at a ratio of 1-for-20 (the “Reverse Stock Split”), with a corresponding reduction

in the number of authorized outstanding number of shares of common stock from 100,000,000 to 7,500,000 .

All of the Company’s

historical share and per share information related to issued and outstanding common stock and outstanding options and warrants exercisable

for common stock in these financial statements have been adjusted, on a retroactive basis, to reflect this 1-for-20 reverse stock split.

On August 8, 2023, the Company received a letter

from the Listing Qualifications Department of Nasdaq notifying the Company that, based on the closing bid price of the Company’s

common stock having been at least $ 1.00 per share for the required period, the Company has regained compliance with Nasdaq Listing Rule

5550(a)(2) and the minimum bid price deficiency matter previously disclosed by the Company on October 25, 2022 was closed.

further described below under note 12, on February 28, 2024, the Company received a new deficiency letter from the Listing Qualifications

Department as a result of the closing bid price for its common stock having again been below $ 1.00 for the previous 30 consecutive business

Going Concern

The Company had cash and cash equivalents of

$ 2,208,516 , as of December 31, 2023.

The Company has incurred net losses since its inception, and has negative cash flows from

operations and had the accumulated deficit of $26,950,990 as of December 31, 2023.

The Company continues to develop the Symphony

device and its first test for the measurement of IL-6.

The Company remains committed to obtaining FDA clearance and will conduct

clinical trials to obtain sufficient data to support its FDA submission, while also continuing to build its manufacturing operations

with its contract manufacturing organizations.

Current cash resources and expected operating expenses are considered in determining

its liquidity requirement;

as well as $ 1,771,375 of current liabilities on its balance sheet as of December 31, 2023.

Company estimates cash resources will be sufficient to fund its operations through the second quarter of 2024.

The Company will need

additional capital to fund its planned operations for the next 12 months.

These conditions raise substantial doubt about the

Company’s ability to continue as a going concern.

The consolidated financial statements for the

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that the Company will be able to realize assets and discharge liabilities in the normal course of business.

However, the Company has incurred

net losses since its inception, and has negative cash flows from operations and will need additional funding to complete planned development

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company had cash and cash equivalents of $ 10.1 million at December

It continues to develop the Symphony device and its first test for the measurement of IL-6.

It remains committed to obtaining

FDA clearance and has expanded clinical trials to obtain additional data to support its de novo FDA submission, while also continuing

to build its manufacturing operations with its CMOs.

Current cash resources and expected operating expenses are considered in determining

its liquidity requirement;

as well as $ 1.6 million of current liabilities on its balance sheet at December 31, 2022 and capital commitments

of approximately $ 2 million during 2023 (see Notes 12 and 13).

Given the Company’s current plans, the Company estimates cash resources

will be sufficient to fund its operations through the fourth quarter of 2023.

The Company will need additional capital to fund its planned

operations for the next 12 months.

The Company may seek to raise such additional

capital through public or private equity offerings, grant financing and support from governmental agencies, convertible debt, collaborations,

strategic alliances and distribution arrangements.

Additional funds may not be available when it needs them on terms that are acceptable

to them, or at all.

If adequate funds are not available, it may be required to delay or reduce the scope of its research or development

programs, its commercialization efforts or its manufacturing commitments and capacity.

In addition, if it raises additional funds through

collaborations, strategic alliances or distribution arrangements with third parties, it may have to relinquish valuable rights to its

technologies or future revenue streams.

The Company expects that it will seek to raise

such additional capital through public or private equity offerings, grant financing and support from governmental agencies, convertible

debt, collaborations, strategic alliances and distribution arrangements.

Additional funds may not be available when it needs them on terms

that are acceptable to them, or at all.

If adequate funds are not available, it may be required to delay its FDA regulatory strategy,

and to delay or reduce the scope of its research or development programs, its commercialization efforts or its manufacturing commitments

and capacity.

In addition, if it raises additional funds through collaborations, strategic alliances or distribution arrangements with

third parties, it may have to relinquish valuable rights to its technologies or future revenue streams.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All intercompany balances and transactions have been eliminated in consolidation.

On June 7, 2021, the Company’s Board

of Directors declared a stock dividend of 2.15 shares of common stock for every share of common stock.

This stock dividend was deemed

a large stock dividend and was treated as a 1-for-3.15 stock split.

The common stock shares and per share amounts (other than authorized

shares) in these consolidated financial statements and related notes have been retroactively restated to reflect the stock dividend for

all periods presented.

Use of Estimates

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in these condensed consolidated

with GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in these consolidated

financial statements and accompanying notes.

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The Company believes judgment

is involved in accounting for the fair value-based measurement of stock-based compensation, accruals, convertible notes and warrants.

The Company evaluates its estimates and assumptions as facts and circumstances dictate.

As future events and their effects cannot be determined

with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the condensed

is involved in accounting for the fair value-based measurement of stock-based compensation, accruals, and warrant issuances.

evaluates its estimates and assumptions as facts and circumstances dictate.

As future events and their effects cannot be determined with

precision, actual results could differ from these estimates and assumptions, and those differences could be material to the condensed

consolidated financial statements.

Financial Statement Reclassifications

Certain balances in the prior year consolidated

financial statements have been reclassified to conform to the presentation in the current year consolidated financial statements.

Cash and Cash Equivalents

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Cash equivalents, consisting of highly liquid

money market are carried at fair market value which approximates cost.

money market funds are carried at fair market value which approximates cost.

The Company recognized interest income associated with cash

equivalents of $ 164,900 and $ 89,673 for the years ended December 31, 2023 and 2022, respectively.

Revenue Recognition

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to governmental authorities are excluded from revenues.

Effective January 1, 2022, the Company adopted

the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases

The Company has adopted ASC 842 using the optional transition method and, as a result, there have been no reclassification

of prior comparable periods due to this adoption.

The Company accounts for its leases under the

Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases

The Company has arrangements involving the lease

of facilities.

Under ASC 842, at inception of the arrangement, the Company determines whether the contract is or contains a lease and

whether the lease should be classified as an operating or a financing lease.

This determination, among other considerations, involves

an assessment of whether the Company can control the underlying asset and have the right to obtain substantially all to the economic benefits

or outputs from the asset.

of facilities and the lease of copiers.

Under ASC 842, at inception of the arrangement, the Company determines whether the contract is

or contains a lease and whether the lease should be classified as an operating or a financing lease.

This determination, among other considerations,

involves an assessment of whether the Company can control the underlying asset and have the right to obtain substantially all of the economic

benefits or outputs from the asset.

The Company accounts for the leases of less than 12 months as short-term leases.

The Company recognizes right-of-use (“ROU”)

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the lease term.

ASC 842 requires the leases to use the rate implicit in the lease unless it is not readily determinable and then it may

use its incremental borrowing rate (“IBR”) to discount the future minimum lease payments.

Most of the Company’s leases

do not provide an implicit rate;

therefore, the Company uses its IBR to discount the future minimum lease payments.

The Company determines

its IBR with its credit rating and other economic information available as of the commencement date, as well as the identified lease term.

During the assessment of the lease term, the Company considers its renewal options and extensions within the arrangements and the Company

includes these options when it’s reasonably certain to extend the term of the lease.

The Company leases include both lease and non-lease

Consideration is allocated to the lease and non-lease components based on estimated standalone prices.

The Company has elected

to exclude non-lease components from the calculation of its ROU assets and lease liabilities.

The Company amortizes the right-of-use assets over the remaining terms of the lease.

ASC 842 requires the leases to use

the rate implicit in the lease unless it is not readily determinable and then it may use its incremental borrowing rate (“IBR”)

to discount the future minimum lease payments.

Most of the Company’s leases do not provide an implicit rate;

therefore, the Company

uses its IBR to discount the future minimum lease payments.

The Company determines its IBR with its credit rating and other economic information

available as of the commencement date, as well as the identified lease term.

During the assessment of the lease term, the Company considers

its renewal options and extensions within the arrangements and the Company includes these options when it’s reasonably certain to

extend the term of the lease.

The Company has lease arrangements that contain

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a straight-line basis over the identified lease term on contracts with rent escalation clauses.

Finance leases are not material to the Company’s

consolidated financial statements.

Fair Value Measurements

The accounting guidance defines fair value, establishes

a consistent framework for measuring fair value and requires disclosure for each major asset and liability category measured at fair value

on either a recurring or non-recurring basis.

Fair value is defined as an exit price, representing the amount that would be received to

sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based

measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs

used in measuring fair value as follows:

Observable inputs such as quoted prices in active markets.

Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company determines fair value for cash equivalents

with Level 1 inputs through the reference to the quoted market prices.

There were no liabilities measured at fair value

on a recurring basis, and no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2023 and 2022.

The carrying values of financial instruments such as prepaid expenses,

accounts payable, and accrued expenses approximated fair value as of December 31, 2023 and 2022 due to their short-term maturities.

Impairment of Property and Equipment

The Company evaluates its long-lived assets with

definite lives, such as fixed assets and right-of-use assets for impairment.

The carrying value of fixed assets and right-of use assets

is reviewed on a regular basis for the existence of facts or circumstances, both internally and externally, that may suggest impairment.

Some factors which the Company considers to be triggering events for impairment review include a significant decrease in the market value

of an asset, a significant change in the extent or manner in which an asset is used, a significant adverse change in the business climate

that could affect the value of an asset, an accumulation of costs for an asset in excess of the amount originally expected, a current

period operating loss or cash flow decline combined with a history of operating loss or cash flow uses or a projection that demonstrates

continuing losses and a current expectation that, it is more likely than not, a long-lived asset will be disposed of at a loss before

the end of its estimated useful life.

The factors that drive the estimate of the life are often uncertain and are reviewed on a periodic

basis or when events occur that warrant review.

Recoverability is measured by comparison of the assets’ book value to future net

undiscounted cash flows that the assets are expected to generate.

If the assets are not recoverable, the impairment charge is measured

as the amount by which the carrying value of the asset group exceeds the fair value.

Concentration of Credit Risk

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preclinical studies and clinical trials.

As of December 31, 2022 and 2021, respectively, the Company had $ 371,000 and $ 0 capitalized in

property and equipment related to pre-production molds and tooling related to the Symphony device.

The Company estimates preclinical study and clinical

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employee share-based payments when they occur.

Forfeited share-based awards are recorded as a reduction to stock compensation expense.

Segment Reporting

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or liability from the beginning to the end of the period.

Deferred Offering Costs

Deferred offering costs consist of underwriting,

legal, accounting and other expenses incurred through December 31, 2023 that are directly related to the January 2024 Offering and

that will be charged to stockholders’ equity upon the completion of the January 2024 Offering.

Net Loss per Share

Basic net loss per share is computed by dividing

the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potentially

dilutive securities.

Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common

stock and dilutive common stock equivalents outstanding for the period determined using the treasury stock and if-converted methods.

common stock equivalents are comprised of convertible preferred stock, convertible notes, options outstanding under the Company’s

stock option plan and warrants.

For all periods presented, there is no difference in the number of shares used to calculate basic and

diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

Potentially dilutive securities not

included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent

loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period,

without consideration for potentially dilutive securities.

Diluted net loss per share is computed by dividing the net loss by the weighted

average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury

stock and if-converted methods.

Dilutive common stock equivalents are comprised of options outstanding under the Company’s stock

option plan, restricted stock units, and warrants.

For all periods presented, there is no difference in the number of shares used to calculate

basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows

(in common stock equivalent shares):

Options to purchase common stock

Restricted stock units

Warrants for common stock

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Recently Adopted Accounting Standards

In February 2016, the FASB issued Accounting Standards

Update (“ASU”) 2016-02, Leases.

The new guidance requires the recognition of lease liabilities, representing future

minimum lease payments, on a discounted basis, and corresponding right-of-use assets on a balance sheet for most leases, along with requirements

for enhanced disclosures to give financial statement users the ability to assess the amount, timing, and uncertainty of cash flows arising

from leasing arrangements.

The Company adopted the provisions of ASU 2016-02 on January 1, 2022 and elected to implement the transition

package of practical expedients permitted within the new standard, which included (i) not reassessing whether expired or existing contract

contain leases, (ii) not reassessing lease classification, and (iii) not revaluing initial direct costs for existing leases.

of the new standard resulted in the recording of initial right-of-use assets and lease liabilities of approximately $ 200,000 as of January

The new standard did not materially impact the Company’s consolidated statements of operations or cash flows.

In May 2021, the FASB issued ASU

2021-04 Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock

Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting

for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues

Task Force) .

The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021,

including interim periods within those fiscal years.

Early application is permitted, including in an interim period as of the beginning

of the fiscal year that includes that interim period.

The adoption date of this ASU did not have a material impact on the Company’s

financial position and results of operations.

Recently Issued Accounting Standards

In October 2021, the FASB issued ASU No.

Business Combinations (Topic 805):

2021-08, Business

Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 805”) ,

an amendment of the ASC.

The amendments to ASU 805 address diversity and inconsistency related to the recognition and

measurement of contract assets and contract liabilities acquired in a business combination and require that an acquirer recognize and

measure contract assets and contract liabilities acquired in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic

606) (“ ASC 606”).

Under GAAP, an acquirer generally recognizes assets and liabilities assumed in a business combination,

including contract assets and liabilities arising from revenue contracts with customers, at fair value on the acquisition date.

2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded

by the acquiree before the acquisition under ASC 606.

This ASU is effective for fiscal years beginning after December 15, 2022, with early

adoption permitted, including adoption in an interim period.

The Company is currently evaluating the effect that this standard may have

on its financial position and related disclosures.

The amendments to ASU 805 address diversity and inconsistency related to the recognition and measurement of contract

assets and contract liabilities acquired in a business combination and require that an acquirer recognize and measure contract assets

and contract liabilities acquired in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606) (“ ASC

Under GAAP, an acquirer generally recognizes assets and liabilities assumed in a business combination, including contract

assets and liabilities arising from revenue contracts with customers, at fair value on the acquisition date.

2021-08 will result

in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before

the acquisition under ASC 606.

The Company adopted this new standard on January 1, 2023.

The new standard had no impact on the Company’s

consolidated statements of operations or cash flows.

Recently Issued Accounting Standards

The Company does not believe that any recently

issued but not yet effective accounting pronouncements will have a material effect on the accompanying consolidated financial statements.

LICENSE AND SUPPLY AGREEMENT WITH TORAY INDUSTRIES

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against any royalties owed to Toray in such calendar year.

There were no sales of or revenues from the Cartridges during the 12-month

periods ended December 31, 2022 and 2021.

On October 23, 2023, the Company and Toray entered

into an Amended and Restated License Agreement (the “New Toray License Agreement”) and a Master Supply Agreement (the “New

Toray Supply Agreement”).

Under the New Toray License Agreement, the Company continues to license from Toray intellectual property

rights needed to manufacture single-use test cartridges, and the Company has received the right to sublicense certain Toray intellectual

property to Sanyoseiko in connection with Sanyoseiko’s ongoing agreement with the Company to manufacture its Symphony device and

cartridges (including in connection with the Company’s clinical trials).

In addition, the New Toray License Agreement provides for

the transfer of certain technology related to the cartridges to Sanyoseiko.

The royalty payments payable by the Company to Toray have

been reduced under the New Toray License Agreement from 15 % to 7.5 % (or less in certain circumstances) of net sales of certain cartridges

for a term of 10 years.

A 50 % reduction in the royalty rate applies upon expiry of applicable Toray patents on a product-by-product and

country-by-country basis.

The New Toray License Agreement contemplates that applicable royalty payment obligations from the Company to

Toray for other products will be determined separately by the parties in the future.

There were no sales of or revenues from the cartridges

during the 12-month periods ended December 31, 2023 and 2022.

Under the New Toray Supply Agreement, Toray will

manufacture in the near-term (through its wholly owned subsidiary Kamakura Techno- Science, Inc.) certain product intermediate components

for use in cartridges being manufactured for the Company by Sanyoseiko.

These cartridges made using Toray intermediates are for the purpose

of obtaining FDA approval and not for commercial sale.

The New Toray Supply Agreement has a term ending on the earlier of October 23,

2025 or the date that the Company obtains FDA approval for its product, and may be extended for up to six months by mutual agreements

of the parties.

Once FDA approval has been obtained, the intermediates and cartridges will be manufactured by SanyoSeiko under a separate

supply agreement between the Company and SanyoSeiko.

At December 31, 2023 and 2022, there

were no amounts accrued related to the License Agreement.

NOTES PAYABLE

2017 Notes Payable

In 2017, the Company entered into multiple

Unit Purchase Agreements (the “Financing”) whereby the Company issued 106 Units.

Each Unit consisted of 100 shares of Series

A redeemable, convertible preferred stock (“Series A”) at a purchase price of $100 per share and $10,000 in notes payable

(the “Notes”).

The Company defaulted on certain Notes issued in 2017 with aggregate principal amount of $ 1,060,000 in January

On February 17, 2021, the Company repaid in cash $ 268,000 in principal and $ 2,010 in accrued interest on the Notes.

On May 26, 2021,

the remaining Notes of $ 580,000 were amended and restated (the “Amended Notes”).

The Amended Notes accrue no interest and

were due in May 2023.

On June 8, 2021, the Amended Notes were automatically convertible into 580,000 shares of common stock at the conversion

rate of $ 1.00 per share upon the issuance by the Company of securities to Sabby Volatility Warrant Master Fund, Ltd (“Sabby”)

(the “Sabby Agreement”).

The amendment and subsequent conversion of the Notes was accounted for as the debt settlement in

equity under ASC 470-60 Troubled Debt Restructurings by Debtors .

The Company recognized a gain on extinguishment of $ 6,360 , equal

to the difference between the carrying amount of the Amended Notes at the conversion date, totaling $ 586,360 , and the fair value of the

common stock shares issued to the noteholders of $ 580,000 .

This gain on extinguishment is included in other income on the consolidated

statement of operations for the year ended December 31, 2021.

For the year ended December 31, 2021 the interest expense on the Notes was

The allocation of the gross proceeds

from the Financing resulted in recording a premium on the Notes of $ 583,349 .

The premium is amortized over the term of the Notes.

result of the event of default in January 2021 and the Notes becoming due on demand, the Company accelerated the amortization of the premium

and discount and amortized the remaining balances during the three-month period ended March 31, 2021.

The Company recognized the amortization

of the premium of $ 145,837 as a reduction to non-cash interest expense during the year ended December 31, 2021.

The premium amortization

was included within interest income (expense) on the consolidated statements of operations.

In connection with the Financing, the

Company paid $ 183,194 in issuance costs of which $ 91,597 was recorded as a discount on the Notes and is being amortized over the term

of the Notes.

The remaining $ 91,597 was netted with the proceeds allocated to Series A (see Note 7).

The Company recognized the amortization

of the discount of $ 22,899 as non-cash interest expense during the year ended December 31, 2021.

The discount amortization was included

in the interest income (expense) on the consolidated statements of operations.

2020 Subordinated Notes

On October 22, 2020, the Company issued

$ 154,000 in subordinated promissory notes (“Subordinated Notes”) to the Company’s stockholders, including $ 30,000 to

Lana Management and Business Research International, LLC (“LMBRI”).

The Subordinated Notes accrued interest at 8 % payable

at each quarter end and had a maturity date of March 31, 2021.

The Company defaulted on the Subordinated Notes on March 31, 2021, and

the Subordinated Notes started to accrue 15 % penalty interest starting on the date of default.

For the year ended December 31, 2021 interest

expense on the Subordinated Notes was $ 7,443 .

In conjunction with the issuance of the Subordinated Notes, the Company issued to each noteholder

warrants to purchase shares of the Company’s common stock (“Subordinated Note Warrants”) totaling 4,846,688 Common Stock

Warrants, of which 944,160 were issued to LMBRI.

The allocation of the proceeds to the Subordinated Note Warrants resulted in a discount

to the Subordinated Notes of $ 148,892 .

The Company amortized this discount through non-cash interest expense using the effective interest

method, of which $ 83,752 was amortized during the year ended December 31, 2021, and included in the interest income (expense) in the consolidated

statement of operations.

On June 7, 2021, the holders of $ 132,383

in principal of the Subordinated Notes elected to exercise their warrants into 4,166,357 shares of common stock, with the principal from

the Subordinated Notes applied to the exercise price of the warrants.

The remaining $ 21,617 principal amount of the Subordinated Notes

was repaid in cash in 2021.

CONVERTIBLE DEBENTURES

On June 7, 2021, the Company entered

into a Securities Purchase Agreement with Sabby, under which the Company committed to sell, and Sabby agreed to purchase, an aggregate

of $ 4,500,000 principal amount of debentures, of which $ 3,000,000 upon execution of the agreement and the remaining $ 1,500,000 within

three trading days of the later of (i) the date that the Company files the Registration Statement with the SEC and (ii) the date that

the Company files the registration statement registering the shares of common stock to be issued in the IPO.

On June 8, 2021, the Company issued

a total of $ 3,000,000 of 7.5 % Senior Secured Convertible Debentures (the “Convertible Debentures”) to Sabby.

2021, the Company issued an additional $ 1,500,000 of Convertible Debentures upon the filing of a registration statement in connection

to the IPO, which was filed on July 22, 2021.

The Convertible Debentures’ principal amount was convertible, at the holder’s

option, into the Company’s Series D Convertible Preferred Stock (Series D) at $ 1,000 conversion price per share.

The Convertible

Debenture was automatically converted into Series D upon the effectiveness of an IPO.

For the year ended December 31, 2021, interest expense

on the Convertible Debentures was $ 124,829 .

In connection with the IPO, all of

the Company’s outstanding Convertible Debentures automatically converted into 4,500 shares of Series D Preferred Stock on the IPO

Subsequently, the holder of the 4,500 outstanding shares of Series D Preferred Stock exercised their option to convert their shares

into 4,500,000 shares of common stock.

The Company incurred $ 729,658 in issuance

costs consisting of cash payments and 225,000 warrants (the “Dawson Warrants”) issued to the placement agent for compensation

for their services in relation to the issuance of the Convertible Debentures.

The Dawson Warrants are exercisable after May 10, 2022 at

the exercise price of $ 1.25 per share of common stock and have a 5 -year term.

The Dawson Warrants were accounted for as equity under ASC

815 – Derivatives and Hedging , and the grant date fair value was estimated to be $ 166,816 using Black-Scholes option pricing

model and is included in issuance costs related to the Convertible Debentures.

The resulting discount is amortized

over the term of the Convertible Debentures using the effective interest method.

The Company recognized $ 266,193 of amortization of the

discount during the year ended December 31, 2021, which was included within interest income (expense) in the consolidated statement of

The remaining $ 463,465 of unamortized discount was credited to the capital accounts at the time of conversion.

were no amounts accrued related to the New Toray License Agreement or the License Agreement.

The following table summarizes information

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Class B Warrants

1 Class B Warrants may also exercise such warrants on a “cashless”

See Class A Warrants and Class B Warrants subsection below.

No warrants were issued during the

year ended December 31, 2022.

The following assumptions were used in the Black-Scholes option pricing model to estimate the fair value

of the warrants granted during the year ended December 31, 2021:

Risk-free interest rate

0.37 % - 0.73 %

Dividend rate

106.00 % - 142.46 %

Expected life (in years)

Common Stock Warrants

In March 2021, the Company granted

a financial advisor warrants to purchase 226,599 shares of the Company’s common stock (the “Advisor Warrants”) as consideration

for services in connection with the IPO.

The warrants are exercisable at any time from the issuance date at the exercise price of $ 3.177

per share of common stock, subject to adjustment based on the amounts raised in the IPO, and have a 5 -year term.

These warrants were accounted

for as equity and the grant date fair value was estimated to be $ 180,339 and were netted against the IPO proceeds.

The terms of the advisory

services agreement also provide for an incentive bonus of $ 200,000 payable upon closing of the IPO if such a closing occurs on or before

January 31, 2022.

This amount was netted against the IPO proceeds.

As of December 31, 2022 and 2021, all of the Advisor Warrants remained

In August 2021, the Company granted

the Dawson Warrants to its placement agent for compensation for their services in relation to the issuance of the Convertible Debentures

(see Note 5).

As of December 31, 2022 and 2021, all of the Dawson Warrants remained outstanding.

In November 2021, the Company granted

108,000 warrants (the “Underwriter Warrants”) with an exercise price of $ 12.50 , and a fair value of approximately $ 356,000 ,

to the underwriter of the IPO which is in addition to the cash fees paid for underwriting the Company’s IPO.

As of December 31,

2022 and 2021, all of the Underwriter Warrants remained outstanding.

In October 2020, in conjunction with

the issuance of the Subordinated Notes, the Company granted 4,846,688 warrants (the “Subordinated Note Warrants”) to the noteholders,

of which 944,160 were issued to LMBRI (see Note 4).

In November 2021, the terms of some of the Subordinated Note Warrants were amended

to provide for cashless exercise.

During 2021, 4,718,251 of the Subordinated Note Warrants were exercised.

As of December 31, 2022 and

2021, 128,438 of the Subordinated Note Warrants were outstanding.

Class A Warrants and Class B

In conjunction with the Company’s

IPO as described in Note 1 the Company issued 2,160,000 Class A Warrants and 2,160,000 Class B Warrants.

Additionally, the underwriter

of the IPO exercised their overallotment option, solely with respect to the Class A Warrants and Class B Warrants, shortly after the IPO

Date resulting in an additional issuance of 324,000 Class A Warrants and 324,000 Class B Warrants.

From the net IPO proceeds, $ 5,164,751

and $ 7,323,161 , respectively, were apportioned to the Class A Warrants and Class B Warrants.

Class A Warrants entitle the holder

to purchase one share of common stock at an exercise price of $ 7.00 per share.

As of December 31, 2022 and 2021 all Class A Warrants were

Class B Warrants entitle the holder

to purchase one share of common stock at an exercise price of $ 10.00 per share.

Holders of Class B Warrants may also exercise such warrants

on a “cashless” basis after the earlier of (i) 10 trading days from closing date of the offering or (ii) the time when $10.0

million of volume is traded in the Company’s common stock, if the volume weighted average price of the Company’s common stock

on any trading day on or after the closing date of the offering fails to exceed the exercise price of the Class B Warrant (subject to

adjustment as described in the warrant agreement).

During 2022 and 2021, respectively, 40,100 and 2,368,500 Class B Warrants were exercised,

all on a cashless basis.

As of December 31, 2022 and 2021, respectively, 75,400 and 115,500 Class B Warrants were outstanding.

Warrants for Series B Redeemable,

Convertible Preferred Stock

The 643 Series B Warrants (defined

below) issued in conjunction with the Series B redeemable, convertible preferred stock (see Note 7) were accounted for as a derivative

liability under ASC 480 – Distinguishing Liabilities from Equity.

On June 1, 2021, the Series B Warrants were amended (“Amended

Series B Warrants”) to become exercisable into 115,190 shares of common stock at an exercise price of $ 2.30 per share and are now

reflected as common stock warrants in the table of outstanding warrants above.

The Amended Series B Warrants were accounted for as equity

and reclassified from liabilities into additional paid-in capital at the fair value determined as of the amendment date of $ 145,953 .

The fair value of the outstanding the

Amended Series B Warrants at June 1, 2021 was based on the assumptions as follows:

Risk-free interest rate

0.31 % - 0.56 %

Dividend rate

Expected life (in years)

PREFERRED STOCK

In 2017 in connection with the Financing

(see Note 4), the Company issued 10,600 shares of Series A.

The allocation of proceeds from the Financing was based on the relative fair

values of the Notes and Series A resulting in the Series A being recorded at $ 476,651 , net of $ 91,597 of issuance costs.

Series A were

being accreted to the redemption value through December 31, 2021, the redemption date.

Accretion of Series A to redemption value, including

the accretion of dividends and issuance costs, was $ 73,912 for year ended December 31, 2021.

In 2019, the Company entered into Subscription

Agreements, as amended, for the issuance of 4,455 shares of Series B plus the committed future issuance of 415 of additional shares (the

“Series B Financing”).

The Series B Financing also resulted in the issuance of a total of 848 warrants (the “Series

B Warrants”).

Series B were subject to accretion to the redemption value through the redemption date.

Accretion of Series B to redemption

value, including the accretion of dividends and issuance costs, was $ 33,993 for the year ended December 31, 2021.

On November 19, 2020, the Company entered

into a Subscription Agreement for the issuance of Series C redeemable, convertible preferred stock (the “Series C Financing”)

In connection with the Series C Financing, the Company issued 636 shares of Series C at a purchase price of $ 1,578.50 per

Proceeds from the Series C Financing, net of issuance costs, were $ 994,832 .

Series C were being accreted to the redemption value

through December 31, 2021, the redemption date.

Accretion of Series C to redemption value, including the accretion of dividends and issuance

costs, was $ 19,961 for the year December 31, 2021.

On June 1, 2021, in connection with

the Sabby Agreement (see Note 5), Series A were converted into 1,668,016 shares of common stock, Series B were converted into 816,226

shares of common stock, and Series C were converted into 100,081 shares of common stock.

The conversion was affected through the joint

consent of the Company’s Board of Directors and stockholders and was subject to and in accordance with the terms of the Certificates

of Designation.

As a result of the conversion, the temporary equity balances at the conversion date were reclassified into the stockholders’

On June 7, 2021, the Company filed

a certificate of designation of preferences, rights, and limitations with the state of Delaware for up to 4,500 shares of Series D convertible

preferred stock (“Series D”).

In connection with the IPO, all of the outstanding Convertible Debentures automatically converted

into 4,500 shares of Series D on the IPO Date.

In November 2021, all Series D was converted into 4,500,000 shares of common stock.

were no Series D outstanding as of December 31, 2022.

As part of the August 2023 Offering that occurred

during the year ended December 31, 2023, the Company issued 216,000 Warrants and 15,120 Placement Agent Warrants, which were accounted

for as equity classified financial instruments under ASC 815, Derivatives and Hedging .

There were no exercises of Common

Stock Warrants during the years ended December 31, 2023 and 2022.

Holders of Class B Warrants

may also exercise such warrants on a “cashless” basis after the earlier of (i) 10 trading days from closing date of the offering

or (ii) the time when $ 10.0 million of volume is traded in the Company’s common stock, if the volume weighted average price of the

Company’s common stock on any trading day on or after the closing date of the offering fails to exceed the exercise price of the

Class B Warrant (subject to adjustment as described in the warrant agreement).

During the year ended December 31, 2023, no Class

A or Class B Warrants were exercised.

During the year ended December 31, 2022, 2,005 Class B Warrants were exercised, all on a cashless

basis, while there were no exercises of Class A Warrants.

STOCK COMPENSATION

18 unchanged sentences

Outstanding at December 31, 2022

Cancelled / forfeited

Outstanding at December, 2023

2 unchanged sentences

Outstanding at December 31, 2022

Cancelled and forfeited

Cancelled / forfeited

Outstanding at December 31, 2023

2 unchanged sentences

value of options granted during the years ended December 31, 2023 and 2022 was $ 10.60 per share and $ 28.40 per share, respectively.

Company calculated the grant-date fair value of stock option awards granted during the years ended December 31, 2022 and 2021 using the

Company determined the grant-date fair value of stock option awards granted during the years ended December 31, 2023 and 2022 using the

Black-Scholes model with the following assumptions:

1 unchanged sentence

1.58 % – 4.35 %

0.78 % – 1.27 %

Expected dividend yield

1 unchanged sentence

102.03 % – 107.36 %

106.00 % – 114.76 %

Expected life of option (in years)

13 unchanged sentences

RELATED PARTY TRANSACTIONS

Lana Management and Business

Research International, LLC

Lana Management and Business Research

International, LLC (“LMBRI”) has board members in common with the Company.

The Company and LMBRI entered into an Expense Sharing

Agreement, whereby the Company will reimburse LMBRI monthly for certain shared expenses including insurance, rent, salaries, telephone,

and other miscellaneous expenses.

The Company was billed $ 4,000 monthly for these expenses through December 31, 2021.

On January 1, 2022,

the Company moved into its own leased facility and no longer shared expenses with LMBRI Such amounts are included in general and administrative

expenses on the accompanying consolidated statements of operations.

The Company also issued Subordinated Notes and Warrants to LMBRI in

October 2020 as described in Note 4.

The table below summarizes the amounts

incurred, paid, and balances due to LMBRI as of and for year’s ended December 31, 2022 and 2021.

Expenses from LMBRI

Expense Sharing Agreement payments to LMBRI

Amounts payable to LMBRI

Interest Incurred and Payments on Subordinated Notes to LMBRI (Note 4)

NanoHybrids, LLC

4 unchanged sentences

NanoHybrids at a bill rate of the respective employee’s fully burdened personnel cost plus 10 %.

NanoHybrids is wholly owned by the

Company’s Chief Technology Officer.

The table below summarizes the amounts earned and due from NanoHybrids for the years ended December

31, 2022 and 2021 and balances due as of December 31, 2022 and 2021:

Additionally, the Company may purchase

certain lab supplies for NanoHybrids and rebill these costs to NanoHybrids.

The Company’s Chief Technology Officer is the majority

shareholder of NanoHybrids.

The table below summarizes the amounts earned for the years ended December 31, 2023 and 2022 and balances

due from NanoHybrids as of December 31, 2023 and 2022:

Income from NanoHybrids included in Other Income

2 unchanged sentences

Amounts receivable from NanoHybrids included in Prepaids and Other Current Assets

Toray Industries, Inc.

In June 2022, the Company sold five Symphony analyzers

to the Company’s business partner, Toray, for $ 249,040 , all of which was paid in June 2022.

Future sales to Toray are not currently

SUPPLEMENTAL BALANCE SHEET INFORMATION

Prepaid expenses and other current

assets consist of the following:

Prepaid insurance

Prepaid clinical trial expenses

Vendor prepayments

Prepaid other

Total prepaid expenses and other current assets

Accrued expenses and other current

liabilities consist of the following:

Accrued personnel costs

Accrued other

Total accrued expenses and other current liabilities

Toray Industries,

2022, the Company sold five Symphony analyzers to the Company’s business partner, Toray, for $ 249,040 , all of which was paid in

Future sales to Toray are not currently anticipated.

PROPERTY AND EQUIPMENT

8 unchanged sentences

accumulated depreciation

( 1,243,716 )

Property and equipment, net

The Company reviews long-lived assets

for impairment when events, expectations, or changes in circumstances indicate that the asset’s carrying value may not be recoverable.

As a result of this review in 2023, the Company revised the useful life of certain lab equipment in the first quarter of 2023 due to a

change in expectations of the time the equipment will be used which resulted in approximately $ 382,795 of additional depreciation recorded

in the year ended December 31, 2023.

The Company primarily enters into lease arrangements

for office and laboratory space.

for office, laboratory space, and copiers.

A summary of supplemental lease information is as follows:

3 unchanged sentences

Operating cash flows from operating leases

Operating cash flows from finance leases

A summary of the Company’s lease assets and liabilities are as

Operating lease right-of-use asset $ 333,267 $ 465,514

Finance lease asset included in property & equipment, net

Finance leases in Property and Equipment 15,152 21,067

Total lease assets 348,419 486,581

1 unchanged sentence

Current portion of finance lease liability included in accrued expenses 4,807 4,807

Non-current operating lease liabilities

Non-current finance lease liabilities included in other non-current liabilities

Noncurrent operating lease liabilities 189,987 323,915

Noncurrent finance lease liabilities 12,321 15,823

Total lease liabilities $ 370,105 $ 513,251

A summary of the Company’s estimated operating lease payments

are as follows:

The following table reconciles the undiscounted lease liabilities to

the total lease liabilities recognized on the consolidated balance sheet as of December 31, 2023:

Operating Lease

Total future lease payments

3 unchanged sentences

Purchase Commitments

In October 2022, the Company entered

into a non-cancelable purchase commitment with an international materials vendor for items needed for both development of the Symphony

product line and also to resell to its customers.

This agreement commits the Company to purchase approximately $ 800,000 in goods, of which

50 % was prepaid in 2022.

No goods have been received under this arrangement as of December 31, 2022.

The Company had multiple open purchase

commitments with its primary contract manufacturing organization in Japan related to the buildout of a manufacturing line for the IL-6

cartridges for the Symphony device.

As of December 31, 2022, the total open non-cancellable commitments for the manufacturing line buildout

totaled approximately $ 375,000 .

As of December 31, 2022, the Company

has entered into other non-cancelable purchase commitments primarily for R&D supplies and key advisory services.

The purchase commitments

covered by these agreements are for less than one year and aggregate to approximately $ 700,000 .

October 2022, the Company entered into a non-cancelable purchase commitment with an international materials vendor for items needed for

both development of the Symphony product line and also to resell to its customers.

This agreement commits the Company to purchase approximately

$ 800,000 in goods, of which 50 % was prepaid in 2022, with the remainder being paid in 2023.

All goods have been received under

this arrangement as of December 31, 2023.

Company had multiple open purchase commitments with its primary contract manufacturing organization in Japan related to the buildout of

a manufacturing line for the IL-6 cartridges for the Symphony device as of December 31, 2022 for approximately $ 375,000 .

During the year

ended December 31, 2023, the Company purchased all items related to these purchase commitments.

Separation Agreement

Under the terms of a separation agreement with

Kenneth Fisher, the Company’s former Chief Financial Officer, the Company has agreed to compensate Mr.

Fisher $ 240,000 (representing

six months of base salary and the pro rata amount of Mr.

Fisher’s 2023 target bonus).

The payments of such amounts are

subject to the compliance by Mr.

Fisher of certain ongoing covenants with respect to confidentiality, cooperation and other matters.

Fisher departed from the Company on September 26, 2023, and the Company has recorded a severance liability of $ 240,000 , which was included

in accrued severance in the amount of $ 150,000 and in accrued bonuses of $ 90,000 .

The Company has paid Mr.

Fisher $ 80,000 as of

December 31, 2023, resulting in an remaining accrual of $ 160,000 which has been included accrued expenses and other current liabilities

on the Company’s Consolidated Balance Sheets as of December 31, 2023.

Minimum Royalties

1 unchanged sentence

(see Note 3), following the first sale of Cartridges, the Company will also make royalty payments to Toray equal to 7.5 % of the net sales

of the Cartridges for the period that any underlying patents exist or for 5 years after the first sale.

Following the first sale, the

Company will pay a one-time minimum royalty of $60,000, which shall be creditable against any royalties owed to Toray in such calendar

The Company will pay a minimum royalty of $100,000 in each year thereafter, which are creditable against any royalties owed to Toray

in such calendar year.

of the Cartridges for a term of 10 years.

A 50 % reduction in the royalty rate applies upon expiry of applicable Toray patents on a product-by-product

and country-by-country basis.

There were no sales of or revenues from the Cartridges through December 31, 2023.

9 unchanged sentences

related to indemnification issues for any period presented.

SUPPLEMENTAL BALANCE SHEET INFORMATION

Prepaid expenses and other current

assets consist of the following:

Prepaid insurance

Vendor prepayments

Prepaid other

Total prepaid expenses and other current assets

Accrued expenses and other current

liabilities consist of the following:

Accrued personnel costs

Goods received but unpaid

Accrued expenses for CFO separation agreement

Accrued legal fees

Accrued other

Total accrued expenses and other current liabilities

No provision for federal income taxes

11 unchanged sentences

( 4,628,641 )

Net deferred tax assets

Deferred tax liabilities:

Net deferred tax assets

Deferred tax asset, net of allowance

A reconciliation of the statutory tax

6 unchanged sentences

Effective tax rate

The Company regularly assesses the

need for a valuation allowance against its deferred tax assets.

In making that assessment, the Company considers both positive and negative

evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence,

whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

In assessing the realizability of

deferred tax assets, the Company considers taxable income in prior carryback years, as permitted under the tax law, forecasted taxable

earnings, tax planning strategies, and the expected timing of the reversal of temporary differences.

This determination requires significant

judgment, including assumptions about future taxable income that are based on historical and projected information and is performed on

a jurisdiction-by-jurisdiction basis.

The Company continues to maintain a

full valuation allowance against its net deferred tax assets.

During the years ended December 31, 2022 and 2021, management assessed the

positive and negative evidence in its operations and concluded that it is more likely than not that its deferred tax assets as of December

31, 2022 and 2021 will not be realized given the Company’s history of operating losses.

The valuation allowance against deferred

tax assets increased by approximately $ 2.7 million and $ 900,000 and during 2022 and 2021, respectively, related mainly to a full valuation

allowance recorded against capitalized research expenditures, additional net operating losses and tax credits generated in the year.

At December 31, 2022, the Company

had federal net operating loss carryforwards of approximately $ 11.2 million.

The Company’s federal net operating losses incurred

prior to 2018 totaling $ 713,000 expire through 2037, while its federal net operating losses incurred in 2018 to 2022 totaling $ 10.5 million

can be carried forward indefinitely.

As of December 31, 2022, the

Company had post-apportioned state net operating losses of $ 10.9 million that can generally be carried forward 20 years and will expire

at various dates through 2042.

As of December 31, 2021, the Company had post-apportioned Massachusetts net operating losses of $ 6.3

million that can generally be carried forward 20 years and will expire at various dates through 2041.

The Tax Cuts and Jobs Act resulted in significant changes to the treatment

of research or experimental (“R&E”) expenditures under Section 174.

For tax years beginning after December 31, 2021, taxpayers

are required to capitalize and amortize all R&E expenditures that are paid or incurred in connection with their trade or business

which represent costs in the experimental or laboratory sense.

Specifically, costs for U.S.

based R&E activities must be amortized

over five years and costs for foreign R&E activities must be amortized over 15 years;

both using a midyear convention.

has implemented this standard on January 1, 2022, noting that the impact on the Company’s consolidated financial statements was

The Company regularly assesses the need for a

valuation allowance against its deferred tax assets.

In making that assessment, the Company considers both positive and negative evidence

related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it

is more-likely-than-not that some or all of the deferred tax assets will not be realized.

In assessing the realizability of deferred tax

assets, the Company considers taxable income in prior carryback years, as permitted under the tax law, forecasted taxable earnings, tax

planning strategies, and the expected timing of the reversal of temporary differences.

This determination requires significant judgment,

including assumptions about future taxable income that are based on historical and projected information and is performed on a jurisdiction-by-jurisdiction

The Company continues to maintain a full valuation

allowance against its deferred tax assets.

During the years ended December 31, 2023 and 2022, management assessed the positive and negative

evidence in its operations, and concluded that it is more likely than not that its deferred tax assets as of December 31, 2023 and 2022

will not be realized given the Company’s history of operating losses.

The valuation allowance against deferred tax assets increased

by approximately $ 3.1 million and $ 2.7 million during 2023 and 2022, respectively, related to a full valuation allowance recorded against

capitalized research expenditures, additional net operating losses and tax credits generated in the year.

As of December 31, 2023, the Company had

federal net operating losses of approximately $ 16.8 million.

The Company’s federal net operating losses incurred prior to 2018 totaling

$ 713,000 expire through 2037, while its federal net operating losses incurred in 2018 to 2023 totaling approximately $ 16.1 million can

be carried forward indefinitely but are limited to 80 % utilization against future taxable income each year.

As of December 31, 2023, the Company

had post-apportioned state net operating losses of approximately $ 16.3 million that can generally be carried forward 20 years and will

expire at various dates through 2043.

As of December 31, 2022, the Company had post-apportioned Massachusetts net operating losses

of approximately $ 10.8 million that can generally be carried forward 20 years and will expire at various dates through 2042.

SUBSEQUENT EVENTS

January 2024 Offering

On January 2, 2024, the Company sold in a public

offering (such transaction, the “January 2024 Offering”) (i) 537,768 shares of the Company’s Common stock, par value

$ 0.0001 per share and (ii) prefunded warrants to purchase up to an aggregate 2,154,540 shares of Common Stock (the “Prefunded Warrants”).

The Shares and Prefunded Warrants were sold together with warrants to purchase up to an aggregate of 2,692,308 shares of Common Stock

at an exercise price of $ 1.30 per share (the “January 2024 Warrants”).

The combined public offering price was $ 1.30 per share

of Common Stock and related January 2024 Warrant and $ 1.2999 per Prefunded Warrant and related January 2024 Warrant.

The Company intends

to use the net proceeds from the January Offering to fund matters related to obtaining FDA approval (including clinical studies related

thereto), as well as for other research and development activities, and for general working capital needs.

The Prefunded Warrants are immediately exercisable

and may be exercised at any time until all of the Prefunded Warrants are exercised in full The January 2024 Warrants are exercisable immediately

upon issuance for a period of five years following the date of issuance.

Pursuant to an engagement letter, dated as of

August 7, 2023, as amended October 11, 2023 (the “Amended Engagement Letter”), by and between the Company and the Placement

Agent, the Company paid the Placement Agent a total cash fee of $ 245,000 equal to 7.0 % of the gross proceeds received in the January 2024

The Company also paid the Placement Agent in connection with the January Offering a management fee of $ 35,000 equal to 1.0 %

of the gross proceeds raised in the January 2024 Offering and certain expenses incurred in connection with the January Offering.

the Company issued to the Placement Agent, warrants to purchase up to an aggregate 188,462 shares of Common Stock (the “January

2024 Placement Agent Warrants”), which represents 7.0 % of the aggregate number of shares of Common Stock and Prefunded Warrants

sold in the January 2024 Offering.

The January 2024 Placement Agent Warrants have substantially the same terms as the January 2024 Warrants,

except that the January 2024 Placement Agent Warrants have an exercise price equal to $ 1.6250 , or 125 % of the offering price per share

of Common Stock and related January 2024 Warrant sold in the January Offering and expire on the fifth anniversary from the date of the

commencement of sales in the January 2024 Offering.

Concurrently with the closing of the January 2024

Offering, certain purchasers have elected to exercise Prefunded Warrants to purchase 174,770 shares of Common Stock.

Nasdaq Notification

On February 28, 2024, the Company received

a notification letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the

Company that the closing bid price for its common stock had been below $ 1.00 for the previous 30 consecutive business days and that

the Company therefore is not in compliance with the minimum bid price requirement for continued inclusion on the Nasdaq Capital Market

under Nasdaq Listing Rule 5550(a)(2).

The notification has no immediate effect on the listing of the Company’s common stock on the

Nasdaq Capital Market.

The Company intends to take all reasonable measures available to achieve compliance and allow for continued listing

on the Nasdaq Capital Market.

However, there can be no assurance that the Company will be able to regain compliance with the minimum bid

price requirement or will otherwise be in compliance with other Nasdaq listing criteria.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures